TOKYO – Oil prices fell in early trade on Tuesday amid concerns over a possible recession and weak use as China surpassed expectations of tougher global supply and rising energy demand following promises of stimulus from Beijing.
Brent crude futures for July fell 35 cents, or 0.3%, to 3 113.07 a barrel by 0122 GMT. US West Texas Intermediate (WTI) crude futures for July delivery fell 36 cents, or 0.3%, to 10 109.93 a barrel. Both benchmarks dropped more than $ 1 before the session.
Brent rose 0.7% on Monday while WTI almost settled flat.
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Kristalina Georgieva, managing director of the International Monetary Fund, said she did not expect a recession for the major economies but could not blow one up.
Toshitaka Tazawa, an analyst at Fujitomi Securities Company Limited, said: “Investors are selling because they expect to reduce global energy costs.
“However, long-term concerns over tight global supplies and hopes of a recovery in demand in China provided some support,” he said, adding that Brent had temporarily forecast to stay in the boxed range of $ 105- $ 115 per barrel.
The head of Saudi Aramco told Reuters that the head of Saudi Aramco told Reuters that most companies were afraid to invest in the sector because they could not increase production capacity faster than promised.
China, the world’s top oil importer, will extend its tax credit rebates, provide social security and suspend debt repayments, launch new investment projects and take other steps to support the economy, state television quoted the cabinet as saying Monday.
Shanghai, China’s commercial hub, aims to normalize life from June 1 as its coronavirus caseload decreases, although the rise of new COVID-19 cases in Beijing has raised concerns for further control.
Meanwhile, the European Union is likely to agree to a ban on Russian oil imports “within days,” according to its largest member Germany, Moscow, which has said it is boosting its economic ties with China after it was cut off by the West over its invasion of Ukraine. (Reporting by Yuka Obayashi; Editing by Stephen Coates)